This is Part 2 of Stephanie's conversation with Maura Ginty - make sure to listen to Part 1 if you missed it!

There are tons of tax benefits for startup founders in Ireland when they approach building their business in the right way, especially if you’re investing!

This week we’re back for Part 2 of my conversation with Maura Ginty of Gintax, a tax specialist with years of experience advising startups, entrepreneurs, and growing businesses.

In this episode, we discuss the key tax reliefs and strategies that startup founders, investors, and business owners need to know, how to structure investments through a company and the tax implications that come with it, employee share schemes, and Maura shares her insights on where the Irish tax system could improve to better support founders and startups.

Main Topics Discussed in this Episode:

1. R&D Tax Credit – how it works and why documentation is key
2. EIIS tax relief – benefits, risks, and why companies need to be cautious
3. Investing through a company – tax pitfalls to avoid
4. Employee share schemes – comparing options and understanding tax implications
5. Where the Irish tax system could improve for startups and founders

Contact Maura Ginty

Email: maura@gintax.ie

Website: https://www.gintax.ie

*****

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tax issues to be aware of to ensure you save time,

money and stress. Hi everyone.

This episode is part two of Stephanie Wickham's chat with Maura

Ginty of Gintax in Ireland, offering specialized tax services

for startups and founders businesses and advice for larger

projects. In this episode they point out key tax

reliefs for startup founders, advice for investors, structuring businesses

for investments, and some quibbles with the Irish tax system that

would be great for you to watch out for. If you've ever thought about working

for yourself or investing as an expat, this episode is a

great one. And make sure you jump back to part one to hear more about

tax specialization in the industry, advice for startups and founders,

and how Maura got her start in tax. Enjoy.

Okay, so I suppose that's one takeaway among the many that we have there.

What are the other tax aspects that you would be kind of

encouraging any founders or people who are, you know,

aspirational founders to think of in terms of their journey

through the Irish tax system? Oh, okay, so this is the one. These are, these

are the, these are kind of the niche, niche tax

aspects that founders, startups should be aware of but not

necessarily mightn't be through the normal, you know, you're setting up a mom and pop

store, right? This is not on the agenda with your high street accountant. The R

and D credit, right. And that's really important

nowadays for startups who are doing rich R and D

innovation. They've modified it in the last few

years. It was dependent on corporate

tax and payroll tax paid. Right. But now it's basically,

essentially like a grant. It is not calculated by reference at all

to your tax that are paid. It's essentially 30% of your qualifying RMD

back. Right. And the thing to be to note for founders

is that there are tight deadlines on claiming that R and D

credit and you need to be nearly on top of it

from the start. And I'd always say to get another. And I don't myself,

my firm, it's one of the areas that I don't advise on because there's two

aspects to it. One is the accounting and the tax aspect, which very

happy to look at and consider. But the other is the science

test And I just think it really needs a

specialist and that's someone who's. Who has expertise or who

knows and not even expert because every. All of these science, nearly all

of the projects are so unique to that client but knows to get the specialist

expertise in whatever project you're doing. And there are firms out there who are able

to drag in the experience. And it's key. The reason I say it's key from

the start and that you need to have documented processes and have good

protocols around the R and D R and D credit. It's one of the few

areas that I think nearly that revenue are it's on their agenda and

that generally revenue due review because it is such a generous relief.

So just to note the R and D credit because that generally is the one

that that it is so relevant for founders.

And there are two other things that come up time and time again.

One I'm not going to like drag down the podcast too much. And this one

is the EIIS tax relief which some founders may be aware

of and sure. Tax relief. So this is where for someone investing

in a company and investor individuals. Right. Not corporates and not

VCs. Individual investors, generally angel investors into a company

or sometimes yourself into your own company can claim a tax

refund, an Irish tax refund on their investors. It

is quite a finicky relief. And it's an

Irish tax relief that's governed by state. By EU state aid.

So it can be on the more

convoluted side. But that's not to say that

you. And also there's significant risk for you as a company

in getting this funding. The reason I say this right is because

where one of the conditions aren't met, then the clawback of the tax relief.

The investors have gone off and got their tax refund. They're happy out. But you

as a company are exposed to that tax clawback. The revenue

will assess you as a company on it. So it can be as a

tax advisor. Right. For all forms of funding that you could potentially raise.

The EIIS is definitely the tax riskiest and the most

exposure for a company. But that's not to say sometimes there are very vanilla

straightforward startups that fit right within

the conditions. Right. And it potentially could be right for you as a

company. So I wouldn't discount it. But that's certainly an area that needs a

really specialist tax adviser. Yeah. But can work very

well. The relief at the moment is up to 50%. The

investors can get up to 50% of their investment back as A tax

refund. So it does kind of marry the risk for the investors

actually. And a lot of the listeners here would maybe on the other side

as well as investors are indeed individuals paying a lot of

POE income. It's the one form of tax relief actually from the individuals that goes

against all income, including landlord rental income, share option

income. So it's quite a generous relief. But the companies that you're

investing in are these very high risk, early

stage, most of them early stage startups. So there is

for you as an investor, it's really the commercial risk, not so much the tax

risk for the company, it's the tax risk and just ensuring that it's. The

conditions are met and are right. And I know it's come up before as well

for us that particularly for perhaps U.S. citizens or anybody

with a U.S. tax filing obligation who comes to Ireland, a little bit of caution

needed and obviously I'm not a US advisor that some of these

investments can not be ideal from a US perspective.

It just goes to highlight, you know, we have the same concept in the UK,

they have VCTs, don't they? And you know, they don't necessarily get the tax relief

in Ireland that the investor would have expected. It's this for the

listeners, I suppose, who are moving cross border. There's

the additional complexity of how does this marry up with

the outcome I would have expected in my, you know, my prior tax return.

But yeah, look, it's great and like you said, you know, there are market, there

are market that you're one of the specialists I would think of when it comes

to eis. It's a niche area even within the tax market, isn't it? Yeah.

Because of the risk involved. Right. As you know, you're,

you're giving your clients, you're trying to give your clients the company comfort on a

relief where the potential downside is very

significant for them. Right. And we can all read Irish tax law, the

sensitivity with it. And I'm just going to go on a high. Can I metaphorical

high horse here, Right. Yeah, go for it. The

sensitivity as a tax adviser is that it's state aid, right. This relief is state

aid and it's governed by EU rules and the EU rules are just

not my view. Right. And I can give my view because I'm my own practice.

Right. But my view is that the EU rules, right,

they're not fit for startups, Right. This particular EU regulation that we're working with

and it was not designed for high performing startups and there

is no regulation that has been designed for. And we're supposed to be trying to

compete with the US as a hub for startups. And

this regulation just doesn't work. It was amended a year or two

ago for green activities. Right. But no specific change

for startups. So, for example, one of the conditions that we need to work through

on a really finicky condition is that the balance sheet, that you can't

have a negative balance sheet right now, there are some outs, but generally that's the

concept and that doesn't work. So you can't have like

lost more money that you've got in right through your balance sheet. And most of

these startups, they're spending money. That's the whole point of them. That's why they need

the cash. Yeah, I know. So you're, you're trying to. And

working with very frustrated founders who have VC and real

investment coming in, people who have invested now. Right. But they're

seemingly failing this test. And the test is. And the, the

background to the test is, is that you, you're. We're

not. The EU isn't supporting companies that aren't viable. That's the,

the purpose of the test. And it just needs it. It

needs more. More. I think the startup, you know, there's so many. And as a

founder, right, one of the first people I would go to is the startup hubs,

right. And there's lots of alliances, but

there probably needs to be a more concerted EU level of those hubs and

government to try and get. Get it more on the EU

agenda. It's supposed to be on the EU agenda, but it's just not coming down.

So. Yeah, so can I get off my high horse? Stay on.

It's. But it's, it's. This is very interesting as well. And I think, you

know, for people who are coming to Ireland and learning about,

you know, one of the comments we often get is, wow, like, investing in Ireland

is just so different to the US or to the uk. You know, in the

UK you've got isis. In the US you've got a active market where you can

kind of buy anything you like. For investors generally coming to Ireland with,

you know, cash, what are the things you say to them? I know you wrote

a fantastic article for Chartered Account in Ireland a few years ago, which is brilliant.

It talks all about the kind of pitfalls, what are the takeaways you'd have if

you're talking to investors generally to watch out for? Maybe if we

focus on people investing through their own company,

we've Spoken about share schemes was one that we were going to talk about

as well. Or for employees. Oh yes, sorry one. Yeah. We're just on investing through

your own company. Right. And just a pitfall of the investor, the 12 and a

half percent. And just to. Yeah definitely to be wary of this point. Yeah. For

individuals coming to Ireland. Right. And they hear the 12 and a half percent. I

think this is great. I'm going to. I have all of my

consultancy money, all of this money in my company. I'm going to use this as

an investment vehicle. P12 and a half percent. Brilliant. Unfortunately,

Irish Irish law doesn't work like that. The. The tax rate in an

Irish company at 12 and a half percent only applies to trading activities.

Everything else the rate, the rate is 25%

or sometimes 33% if you, if it's a capital investment. If you sold

shares, we'll say and, and also potentially where you leave that there's,

there's anti avoidance provisions where you leave the money roll up in, in a, in

a company longer, longer term than the rate. The effective rate goes up to around

40%. So as a rule of thumb, as tax advisors say to people, rental

income because Irish, Irish people, Irish investors love property. The

default rate in a company on that income is 40%

which is slightly better than in your own name at 55 but not much

if you're thinking of potentially having this asset in your own name and the

double charge to tax. So there's a whole host of things to kind

of work through with a client as to whether investments should

be made in the company. And also those investments may prejudice.

I mentioned that retirement relief and those CGT reliefs and those

exemptions and they mean your company. And all of those exemptions work really

well but are targeted at trading. The Irish tax regime is

really targeted at trading entities. And where you

don't, where you, where you contaminate or have bad assets, it can make

it a bit of a bit of a nightmare going forward. So that's

always one that's maybe. I think certainly people come into Ireland

with that kind of profile. It's a new one for them. And I know

we get that a lot. You know, I'd like to buy an investment property. Should

I put it into a company? And my answer is

a little bit like yours. It's generally that well no, don't do anything here now

until we kind of step it through that. I think that headline

12.5% rate can be a bit misleading for people because

it's not really commonly understood that it is very much

targeted at trading entities and, you know, again,

other conditions apply. So we have to think around the

efficiency. We don't just focus on the actual rate. That applies to the profit being

generated on an ongoing basis. You've alluded there to,

I suppose, things you'd love to see changing in tax

law or policy. Is there anything else that you'd love to see changing in the

Irish regime? That was my. Yeah, that was when I was on my. That was

the main. I wanted to get across, I wanted to give out of regulation.

Get back on your horse. Yeah. For

startups, I, I actually the reliefs that are there. Right.

Are really good in theory. There's another one I just want

to. Just for founders. Right. And share share schemes. Because that, that comes up a

lot. Yes. I'd like to touch on this as well. Yeah, yeah. So there's two.

So, oh. By far, commercially, for a startup company, share

options are ideal and they work lovely. There's

not, there's really limited admin. So from a commercial perspective, the

employees only, they're, they, they, they, they have limited involvement in

the company but they have the economic value. If the shares go up in value

and the, the, the company, the employees are quids in the sensitivity with share

options is the tax rate on them is absolutely horrendous. The

gain on a share option is like you've received salary and your default rate is

50, 52%. Sorry, when I talk about the 50%, I talk

about the marginal rate and that's the top rate you'll pay, which is quite a

lot for employees. So generally your boilerplate

is the share options. Right. A few years ago the government

did try to introduce a regime for Start and it's. Sorry, it's still, it's

still there and I just want, I just want. It's called keep. Right.

And where you qualify as a startup then,

rather than the 52% for the employees on the exercise and the rate of the

capital gains tax rate at 33% which is a, it's a grand

answer. Right. Compared to the 52%, it's lovely. Keep is also one

of these ones that are subject to very. A lot, a lot of

conditions and the EU regulation. But at the

start, right, when you're setting it up, there's no reason why you

wouldn't structure your ESOP so that it could qualify for keep. Right.

The admin at the start is relatively light, so I always say

where you are going for a share option, basic share option scheme and

your lawyers have given just to make sure that it would qualify for the keep

as well. There's not too many changes in the conditions to me. And sometimes the

lawyers have that it's part, it's, they've already considered and they're, they're

satisfied or they won't give you assurance that it's, you know, isn't. Because it's, you

know, they're, they're not tax advisors, but they try and ensure that it could be

met. And then from your side it should be just if there's no one exercising

the shares, then it's just annual compliance, which isn't the worst thing in the

world. You can always worry more about it when they exercise.

But at the start I always say let's try if you are a share option

then, then let's try and target this. Very good point,

actually. Yeah, no, I wanted to because a lot of times and lawyers just say,

just are afraid of it. But there's nothing to be lost

from trying to get it commercially. Share options from a

company work better. Right. But from a tax perspective,

what works better is just having the employees as owners from the start.

So because if the employees get the shares

when the company's worth nothing, then that's their tax point. They've got, they've got something

and the company's worth nothing. Therefore their, their tax is nothing. And

all of the uplift goes to them. Their normal capital gains tax rate, if they

have more than 5% of the company, then their tax rate is, is 10% on

disposal. So that entrepreneur relief rate, which is limited at the 1

million, it's on the line. You know, we're always as part of some representative

bodies and we do lobby for these, these the

limits to be increased. But still the generally and for those kind

of employees, that 10% rate for, for those shares is very good.

Right. The sensitivity is there's a lot of people on the share register and

their share, you know, you're, you're giving up equity and now

there can, you can structure it so that they have limited rights and different

classes of shares or you can also structure it where the company has

value. And this is common also in the market where the company has value, that

there's something called a growth share where the employees come in and the shares

only come into value once the, when certain thresholds are made

flower at a certain point. Yeah, flowers.

And also you can restrict that the employees can't sell the

shares for a number of years and that reduces the taxable value for all of

those after day one for all of those then in my view, right, you probably

will have a small tax point being there is some value that the employee will,

will be receiving. But it's, it works

very well from a tax perspective. It's just, it is very complex on the, it's

complex on the legal side. It's not impossible, but just you're a startup and you've

got a million things to do. You know, it's, it's, there's a bit of

work from a legal side and a commercial side even determining exactly

the terms of these shares and what you, what you want and don't want voting,

you know, all of that is, it's, it's complex.

It's complex and I suppose it's, it's preempting value that

may not yet have crystallized. So therefore you're investing.

I mean it's a great point to kind of incentivize employees to come work for

you. We generally find employees love these schemes because you

know, it aligns, you know, HR performance. You know,

they work very well from a commercial perspective. But of course

there has to be kind of quits in to kind of get it all up

and running, stay compliant and then hopefully cash out at the

right point. And just to touch on that and kind of I suppose

give an overview to the parties who you would work with routinely. On

those would obviously be the accountant yourself and legal

advice. Yeah, mostly with the lawyers. Right. The accountant might,

those kind of companies. The accountant is relatively, you know, it's, it's,

it's, it's mostly lawyers and myself. There is an accountant there or an external

accountant, but it's mostly getting the documentation and structuring.

Right. So on. Sometimes the accountant might refer me or

else might warn the investor. You know, they realize there's an issue here or a,

a problem here or actually a lot of those is the lawyers themselves who are

under. Specialist lawyers in this, in this field and that you'd like.

It's not, it's. You wouldn't, you know, not your kind of high street solicitor and

that there are ones who deal mostly with startups and I would think that's why

I would always suggest the start, you know that there's a lot of hubs and

start, you know, startup. They will have the names of people who, that's it. Who

are the right ones to go to. You don't want to reinvent the wheel.

No, just you know, tread the path that is well trodden and don't make

life any harder for yourself. More like we could talk all day about like any

of these topics. And even for me personally, I love hearing kind

of your insights and experience. What's next for Gentax?

What's your plan? Because you've obviously, you know, you've had a very successful

few years. You know, you've grown exponentially very quickly and it's

easy to see why because you bring so much to the table for your clients.

What's your plan? To grow beyond me? No, in fairness. So I

have, I have two other advisors. Right. And I want,

I see a real. More than your own firm, Stephanie. There's a real market

for specialist niche, niche tax advice.

And there are less and less firms in the market. Right.

And a lot of consolidation, bigger brands, bigger firms.

And I see, I see a role

for an independent firm who are, who are solely tax

advice and work alongside a lot of those firms who may be conflicted or else

someone wants a different view or a different opinion. So my main, my

main aim in the next, it's not clients, it's trying to get people and staff,

you know, and a couple of more, more hires and more. And other

advisors. I'd be agnostic. Agnostic

on where they come, what, what level of experience they, they have. Because I'm

conscious most tax advisors in this market are in big practice

and are mainly servicing big

multinationals. So may not have what we're doing and what you're doing,

I know Stephanie as well, is relatively,

it's, it's relatively small or. Yeah. Small pool of talent,

perhaps. Yes, exactly. So if I was to try and recruit from the people

who are already experienced in that market. It's not, it's not, it's,

it's not going to work. I do think, I like it's

not. But I think if you've got a good brain for tax, if you're good

at tax generally. Right. It's the same, it's the same, it's

the same law we add on the Capital Acquisitions Tax act. But

broadly it's the same red book. Exactly. It's the same red book I

do. As a tax advisor. It's my one luxury. I do buy the hard copy

every year. It's my luxury desert island item.

Oh God, I'm such a loser. No, it wouldn't be.

If you were attracting people to work with you. One of the things that kind

of comes through from what you said is, you know, the variety,

the role offers. I get the sense that, you know, your clients are

front and center of everything you do. It seems as well that you offer a

role to anyone who's interested in working with you. That kind of allows them to

suppose have their own personality and have work life balance as well. Is that kind

of what you feel you could offer? Yeah, culture. Culture, Right. So I don't view

myself as. I'm not a natural entrepreneur. Right. I don't. I prefer not to be

trying to set up my own practice. But.

Right. What I. And I know there's a market

for this tax advisory in this market. Right. As a specialist

firm. But I, I do think. But there's limited amount of firms that are

doing it and those firms. And I haven't inter.

But we can do it a bit differently. Right. A lot of them are like

mini big, big, big practices with the same policies, the same

exactly everything same, but just on a minute level. Right. And they don't need

to be. We can do it. I think you've got very similar, similar thoughts

here. We can do it differently and we can question why we're doing

it like this. Does this work? The world has moved on so

much and I certainly think, I think we're both very much on the same

page regarding people and flexibility and trying to build

a firm around the people more so than the firm. Now there is a balance.

I do appreciate that. But definitely, yeah, I totally agree.

And I think it's amazing how receptive really good

candidates are to that type of an attitude. It's actually, it's amazing

because, yeah, I think the world that we live and work in now is very

different to what it was even five years ago, you know, pre Covid. And you

know, it really gives you an ability as you know, a founder of a practice

to kind of position yourself slightly differently if you think a little bit differently. Yeah,

but it's not. And I'm surprised there's not many. But there's not many more people

doing it. So for example, someone who wants to work with. Certainly somebody wants to

work two days a week. Right. I'm fine with that. No issue at all. You

know, that's lovely. So being very flexible

to their needs is. And you know, even our, you know,

even the hours of the core hours, nine to have five. I don't care.

Right. As long as the work gets, you. Know, just that the works get done.

And I think as well the beauty as well of, you know, even from people

coming. We often hear, you know, for clients coming

from some of the bigger, I guess experience with maybe a larger service

provider, they actually really enjoy the fact that they get to have like someone

one Person they're not dealing with a team of people. They have one direct

contact. They understand that person may not work five days a week.

So it's easy to manage as well when you kind of everyone understands the expectation

because we're. Yeah. We're profess. And that I generally find with tax advisors and

even in where we work it just. People work really hard. You work really hard.

And if you're into it, right. So it's not like

if you're not there at 9am that you're not working. You know,

there's a lot of trust. It's. We're a funny breed, aren't

we? We are. But if you're into it, then you're into. I, I, you're

just. We shouldn't explain it. We just have to accept it.

But you know, you know, what do. You do before we finish up? Because I

think it's nice for us to share as well. I, I do follow you on

Strava and I can can definitely vouch for the fact that Maura is super

fish. She's way faster than I am at running. But what apart from running what

you do? You are. I, I seen your times. You're excellent. You're

excellent. She slipped me in it up up big here.

What, what did you do outside of work? You obviously run. What do you, what

do you enjoy aside from that? I do so I do feel passion

because in my, when I was, when we were back in KPI in my younger

days, right. I didn't have any hobbies really outside bar socializing

and, and, and my profession. Right. So I would feel

passionate about having and I've low now now I've completely changed.

Right. And I love like the running as you

mentioned. I love hiking going like

myself and my mates go on a big European hike every summer and sometimes. Well

before I started my business we used to just to go further afield but it's

been Europe for the last few summers and I love what else do I. Skiing.

So one of the things that you know with skiing and I really enjoy. But

it's a winter sport, right. And January, January is a quiet time of the year.

Well certainly from my for tax advisory structuring works and I find it

like I can go skiing now right. Twice or you know in

that period and it's not a big deal for my, for my business.

Right. But if I was in, if I was like stuck with

2025 days holidays it would be eating into most of my

annual holidays for you know, it's, that would Be way too much

so I just love that flexibility now in my

life that I can, I can do this equally. I know I don't have kids,

but I know people with kids love the summer months to. And you're

a proponent of this. We're going to Thailand again.

So we've. Yeah, but we only have so many summers in our lives. I mean,

that's it. Yeah, I. To try and step

back a little bit at summertime and just to enjoy your friends and it'll

ramp up very quickly. Ramp up again in September, October. But

it's. You get so much out of those hobbies and

having a lot of interests that you can actually bring to your work. Like

the, you know, the, you know, the running the, you know, just as in you're

pushing yourself, you know, with competitive running and even getting out the door and

trying to do a session and knowing, oh, I've done that and you can bring

that. I actually kind of go further as well and say, you know,

when this probably sounds silly, but when your advisor

actually is not just necessarily working and

doing nothing else, they're in a better position to advise you about

maintaining perspective when you are going through these big commercial

deals. In other words. Exactly. Back to your point earlier on. Why are you doing

this? What do you want to achieve? Don't just solve. I don't like paying

tax. Work out. Why are you paying tax to begin with? It's because you work.

Is that what you want to do? I mean, and not to say we're life

coaches or you know, financial. Where it comes up a lot is the moving

abroad. Totally comes up all the time.

I'd like to leave my family and live in Dubai for three years. And I'm

like really? For tax reason only.

Step this through. It's complex

and yeah, I, I actually thought, you know, you

said something here in your notes. I love tax. So it's very difficult and need

to want to engage with it and with clients. We need the

two. And I think you're right. You know, it's about enjoying the technical aspect of

it but also enjoying. It's a very people orientation. That was my promo

to try and get stuff, try and get more advisors working with me.

Contact Bora actually more for reference.

Anybody who would like to send their CV to you. Anybody who has questions

about incorporating an Irish

service based business or other insert trading company here. Anyone

who is a founder of what might be a unicorn in future or who has

questions about things we've spoken about today. How should they contact you?

And yeah, what should they put in the subject line to catch your attention?

Unicorn. No, everyone wants to find one unicorn.

You just email me@maurajintacts.ie. Fantastic. I

get that. Yeah. I so enjoy talking to you. We could talk all day. And

you know what? You know, being able to just kind of cut through the complexity

of what is. You know, that red book we spoke about is a beast. And

you, you really. You've really succinctly and nicely explained it. For people

who either know a little bit, want to know more, or need to know more.

There'll be people in each of those categories. Thank you so much for joining us.

Mike Garman. Can I say Mike Garman as well as the TCA on the desert

island. Sorry, no. He said the red book. There. That's it. There's no

garment. Such a loser. Okay, thanks a million,

Stephanie. Thanks, Ma. Bye. Bye.

Thanks for listening to Taxbytes for Expats. Please do leave a

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